Trump’s health care budget, explained

Trump’s health care budget, explained

If Donald Trump’s administration could do anything it wanted in health care, this is what it would do, as told by the FY 2019 budget the White House released Monday.

Repeal/replace Obamacare and overhaul Medicaid with Graham-Cassidy — but harsher

At least officially, Trump isn’t giving up on repealing the Affordable Care Act. The budget proposes enacting a repeal-and-replace bill that closely resembles the plan put forward by Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) last fall, which would have turned much of Obamacare’s funding for Medicaid expansion and premium subsidies into block grants for states to create their own health care programs. It would also overhaul Medicaid with a per-person spending cap.

That plan, you will recall, was projected to lead to 20 million fewer Americans having health insurance in 2026, versus Obamacare, and a $215 billion cut to federal health care spending over 10 years.

This is a good time to note that presidents’ budgets don’t have any force of law and are rarely acted upon. Nevertheless, they are a window into the administration’s priorities and can set the table for future policymaking — say, if Republicans expand their Senate majority in 2019.

The Trump proposal implements the deepest possible cuts for Medicaid and the Graham-Cassidy block grants, picking the lowest of the available growth rates (the regular Consumer Price Index, which is lower than the medical CPI) for the block grants.

The net result is a $675 billion federal spending cut by 2028. That includes a $1.4 trillion cut to Medicaid (offset by spending on the block grants) after Trump promised during his presidential campaign not to cut the program.

Lower drug costs for Medicare and Medicaid

Trump has so far neglected to follow through on one of his core campaign promises: fighting pharma and lowering drug prices. But his budget does have a few new proposals on drug costs.

First, state Medicaid programs would be allowed to establish drug formularies — tiered systems that give preferential treatment to certain drugs over others and which private insurers use to negotiate prices with drug companies. Drug pricing experts have been wondering if the Trump administration would approve Massachusetts’s waiver to set up this kind of Medicaid formulary.

The catch, however, is that the administration says that it would need Congress to act in order to approve such changes in Medicaid. So while the budget nods toward proposals like the one in Massachusetts, it’s not clear whether that means the waiver will actually be approved.

The White House is also proposing several changes to Medicare’s prescription drug benefit in the budget:

  • Create an out-of-pocket maximum; above a certain threshold, seniors would not have to pay any more of their drug costs

  • Require private Medicare Part D plans to share the rebates they receive from manufacturers with beneficiaries

  • Give Medicare Part D plans more flexibility to set their formularies, which should give them more negotiating leverage with drug makers

  • Allow for certain drugs to be moved from Medicare Part B, where there is a set formula for drug payments, to Medicare Part D, where there are some negotiations between private Part D plans and drug companies

In summary, the most specific changes the White House is proposing would address cost-sharing for patients — out-of-pocket maximums and rebate sharing — which is good for the Medicare beneficiaries but doesn’t directly target underlying drug prices.

However, the administration is also starting to introduce some ideas that would tackle underlying costs. They propose doing this through the more expansive Part D formularies and by moving some drugs from one part of Medicare where there is no negotiation to another part where there is.

The net savings — some policies, like expanded formularies, save money; others, like the out-of-pocket caps, cost money — are a little less than $6 billion over 10 years.

More targeted cuts to Medicaid and Medicare

The big picture is the Medicaid spending caps, which would fundamentally change the nature of the program. You can add up $1.4 trillion in Medicaid cuts through the major reforms being proposed in the budget under Graham-Cassidy.

But the Trump administration has other ideas for Medicaid, too:

  • Deny benefits to people who cannot prove their immigration status ($2.2 billion in cuts over 10 years)

  • Increase beneficiaries’ copayments for improper use of the emergency room ($1.3 billion in cuts over 10 years)

  • Allow asset testing, which adds up all the value of a person’s property and belongings, in addition to income as a test of Medicaid eligibility ($2 billion in cuts over 10 years)

There are an additional $266 billion in Medicare cuts proposed in the Trump budget in the name of eliminating wasteful spending — though they are largely cuts in payments to health care providers, rather than cuts to eligibility or benefits.

Insufficient response to the opioid crisis

Another core Trump pledge: combatting the deadly opioid epidemic that is now killing more than 60,000 Americans annually. But, like his previous executive order, the proposals in Trump’s budget fall far short of what experts say is actually needed.

Trump’s budget provides $10 billion for vaguely defined efforts to prevent opioid abuse and expand treatment, plus a couple billion dollars for border security.

That is a lot of money, of course, and it is more than the federal government has managed to pull together so far, even as the crisis gets worse and worse. But as Vox’s German Lopez has documented, experts say that we need tens of billions of dollars to fight the addiction scourge. Opioid abuse cost the entire country $80 billion in a single year.

The funding included in Trump’s budget is more than advocates have come to expect in Washington’s stalled response to the crisis. But for a document in which the White House can propose anything it wants, it still isn’t nearly enough.

Shrink the Department of Health and Human Services

Finally, Trump proposes eliminating several notable pieces of the federal health care bureaucracy:

  • Agency for Healthcare Research and Quality, which is tasked with evaluating best health care practices. (The White House says its mission is duplicated by the National Institutes of Health and other agencies.)

  • Community Services Block Grant, $700 million in annual grants for health care, food, and workforce programs. (The White House says again that this money is duplicative.)

  • Health care workforce programs, which help train medical students and fund their education, etc. (The White House says there is little evidence that these programs improve the nation’s medical services.)

Low-income home energy assistance, a $3.4 billion program that helps poorer people afford heating and air conditioning. (The White House says the program is stricken by fraud and abuse.)

This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.